Google shares break $1,000 barrier as mobile pays off

By Soham Chatterjee and Alexei Oreskovic20 hours ago

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The new Nexus 7 tablet is demonstrated during a Google event at Dogpatch Studio in San Francisco, California, …

By Soham Chatterjee and Alexei Oreskovic

SAN FRANCISCO (Reuters) - Google Inc shares jumped past $1,000 on Friday as investors bet on the Internet company's continued dominance of the mobile and video advertising businesses despite aggressive competition from Facebook Inc and Yahoo Inc.

Shares of the world's No. 1 search company rose more than 14 percent to an all-time high of $1,015.46, swelling its market value by about $40 billion.

That vaulted Google past Microsoft Corp and Berkshire Hathaway Inc in capitalization and brought it to No. 3 among U.S. companies, behind only Apple Inc and Exxon Mobil Corp.

Google, whose Android is the world's most-used mobile software and YouTube is the most popular video-streaming service, on Thursday reported a 23 percent jump in net revenue from its Internet business. Advertising volume soared 26 percent - the highest rate of growth in the past year - and more than made up for an 8 percent slide in ad prices.

But given concerns about how U.S. companies can increase revenue in an uncertain global economy, those numbers suggested Google was firing on all cylinders except for its perennially money-losing Motorola unit, analysts said.

"Google's ownership of the Android ecosystem makes Google like the house, in Vegas terms," said Stifel Nicolaus analyst Jordan Rohan. "The success of Android, which becomes more and more popular every day, is starting to really add up, and Google is collecting small tolls along the way."

Rohan said accelerating revenue growth outside the United States and the UK was impressive, particularly in South Korea and Japan. "That could go on a while," he said.

At least 16 brokerages raised their price targets on the stock to between $880 and $1,220. The shares were up 13.7 percent, or $121.82, at $1010.62 on Nasdaq at mid-afternoon.

"We view solid paid clicks growth to be a good indicator of demand, driven by the continued shift to mobile," JPMorgan analysts said. They had expected 21.5 percent growth in ad volumes.

BEWARE ...

While much of Wall Street raised their price targets to above $1,000, Brian Wieser of Pivotal Research Group kept his at $880 and rated Google a hold.

Some analysts warn that spending on ambitious projects with as-yet unproven commercial potential - self-driving cars and wearable Google Glass being among them - may erode margins. Wieser estimated that, excluding traffic acquisition costs, gross margins slipped to 34.9 percent in the third quarter from 37.2 percent in the previous three months.

Facebook and Twitter Inc, which will soon raise $1 billion or more in this year's most-anticipated initial public offering, may also increasingly grab smaller customers from Google.

And then there is Motorola - which only recently began selling the vastly customizable Moto X smartphone in a bid to reverse years of losses and finally generate growth. Sales numbers are not yet available but reviews generally dismiss the device's chances of displacing, say, the iPhone.

Motorola, acquired by Google in 2012, racked up a loss of $218 million before items in the third quarter, more than four times the $49 million it lost a year earlier.

"While we acknowledge that most investors will look at Google more positively following this quarter, we think that over time issues such as margin erosion, competition and capital intensity will eventually impact the stock," Wieser said, explaining his below-average price target.

A STUDY IN CONTRASTS

Google's Friday rally stemmed in part from investors' focus on Facebook and its own increasingly successful efforts to sell advertising on mobile devices. Google stock had gained just 26 percent this year, while Facebook's has almost doubled.

Google and Facebook, which is expected to report its third-quarter results on October 30, also stand head-and-shoulders above the likes of Yahoo. The once-dominant Internet portal this week reported a tepid quarter, losing market share in display and search advertising.

Facebook rose 3.6 percent to $54.08 on Friday, while Yahoo was up 2 percent at $33.40. Baidu Inc, often called China's Google, gained 7.1 percent to $164.78.

Some say Google still has room for improvement. JPMorgan analysts said continued efforts to counter declines in ad rates might yield a major opportunity in the upcoming holiday season.

Google this year rolled out a service to help advertisers promote their products on a mix of smartphones, tablets and desktops. The move is also expected to bolster Google's overall advertising rates by mitigating the impact of mobile ads, which command lower rates.

Others say YouTube's potential remains only partly tapped. Ads on the site increased more than 75 percent in the quarter, with 40 percent of traffic now coming from mobile devices.

"We estimate that Google's key YouTube asset generated approximately $4 billion in revenue in 2012, positioning Google extremely well for the strong growth in video advertising," RBC Capital Markets analysts wrote.

2013 Nobel Prize In Physiology Or Medicine

For their discoveries related to the machinery that regulates the cellular transport system, which is critical to cell functioning,James E. Rothman, Randy W. Schekman, and Thomas C. Südhof were awarded the 2013 Nobel Prize in Physiology or Medicine.

Cells move molecules around using tiny membrane-enclosed packages called vesicles. This year’s Nobel Laureates, who will share the $1.2 million prize, discovered how cells get those vesicles to their intended destination at the intended time.

The three winners discovered different aspects of the system. Schekman discovered a set of genes required for vesicle transport. Rothman determined the proteins that allow vesicles to fuse with their targets and thus transfer materials. Südhof discovered the signals that tell vesicles when to release their cargo.

Schekman, a cell biologist at the University of California, Berkeley, developed a genetic screen of the yeast Saccharomyces cerevisiae to determine the genes that regulate vesicle trafficking. By using yeast with defective transport systems, he was able to determine where vesicle traffic backed up. With this information, he identified 23 key genes, which can be divided into three classes that control vesicles at the Golgi complex, the endoplasmic reticulum, or the cell surface.

Rothman, a cell biologist at Yale University, determined that proteins known as SNARE (solubleN-ethylmaleimide-sensitive factor-activating protein receptor) allow vesicles to fuse with their target membranes. These proteins had already been discovered by others, but their function was unknown. Rothman determined that these proteins interact with high specificity: The SNARE protein on a particular target membrane is able to interact with only one or a few vesicle SNARE proteins.

Südhof, a biochemist at Stanford University, identified the genes that are responsible for controlling the timing of vesicle fusion, particularly those involved in the release of neurotransmitters. He discovered how calcium regulates neurotransmitter release and that two proteins—complexin and synaptotagmin-1—are key players in calcium-mediated vesicle fusion. Synaptotagmin-1 acts as a calcium sensor during synaptic fusion. Complexin acts as a clamp during synaptic fusion to make sure that regulated exocytosis occurs instead of the vesicle simply being incorporated into the cell membrane.

Glitches in vesicle transport are associated generally with some human diseases, such as diabetes. Mutations in genes associated with the protein machinery are involved in specific diseases. For example, mutations in one of the genes are involved in certain forms of epilepsy.

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Nobel Prize in chemistry honors 3 for computer modeling research Arieh Warshel of USC, Michael Levitt of Stanford and Martin Karplus of Harvard are recognized for their pioneering use of computer modeling programs in studying chemical reactions.

As a chemistry professor at USC, Arieh Warshel says he sometimes finds it difficult to convince his fellow scientists that computers have a place in experimental fields like his own.

Many people, he laments, use them to make or watch movies, "but not to understand."

Though Warshel may hold a minority view on a campus with strong ties to Hollywood — visitors to his laboratory's website are informed that his animated computer simulations are not available on Netflix — he got a huge endorsement Wednesday from the Royal Swedish Academy of Sciences in the form of a Nobel Prize.

Warshel, Michael Levitt of Stanford University and Martin Karplus of Harvard University were awarded the 2013 Nobel Prize in chemistry for their pioneering use of computer modeling programs to help predict and illustrate complex chemical reactions.

The longtime collaborators and close friends will share about $1.2 million in prize money for devising programs that blend elements of classical chemistry with the strange and dualistic realm of quantum physics.

Their work, which began in the 1970s, has revolutionized chemistry and biochemistry research to the point that some scientists now conduct as much of their work on computers as they do in the lab with beakers and test tubes.

Though much of this change has occurred outside the public eye, members of the academy said it had led to a deeper understanding of molecules essential for life, as well as those used for pharmaceuticals, energy production and other industrial purposes.

"Chemical reactions occur at lightning speed," the academy said in its announcement. "In a fraction of a millisecond, electrons jump from one atomic nucleus to the other. Classical chemistry has a hard time keeping up. … Aided by the methods now awarded with the Nobel Prize in chemistry, scientists let computers unveil chemical processes."

At Stanford, Levitt said he was thrilled to see that the contribution of computers to chemistry and biology research was finally being recognized. He said the approach he has championed for about 40 years was just now coming into its own.

"As somebody who never really worked in a lab, it's very nice to see that computers have this place to play," he said.

Levitt, 66, drew a parallel with the aircraft industry.

"Thirty or 40 years ago, airliners were designed by engineers in wind tunnels. Now it's all done by computer," Levitt said. "I think we're going to get that way in biology and chemistry."

At his home in Cambridge, Mass., Karplus told a Harvard Gazette reporter that well-wishers had been asking him to explain his work in "simple terms."

"If you like how a machine works, you take it apart," said the 83-year-old Vienna native, who also has an appointment at the University of Strasbourg in France. "We do that for molecules."

In the 1970s, chemists relied on three-dimensional models of molecules — Tinker Toy-looking assemblies of sticks and balls — and X-ray crystallography to divine the shape of molecules and study their interactions.

Even when scientists began using computer programs in the 1970s, limits in processing power forced them to focus on small molecules. They also had to choose between using classical or quantum theories of physics.

To address these problems, the three chemists came up with computer modeling programs that were able to use both. By applying quantum calculations to the most chemically active portions of interacting molecules, and classical equations to less dynamic areas, they were able to calculate plausible reactions that could then be tested in actual experiments.

Their methods are currently being used to optimize the efficiency of solar cells and improve catalysts that "clean" the exhaust fumes of motor vehicles. Warshel made particular mention of the fact that computers can help pharmaceutical researchers find ways to "outsmart" a virus, such asHIV, that mutates in response to a drug treatment.

Much of the prize winners' early work was conducted in Israel, where Warshel and Karplus worked together on a powerful computer called Golem. The device was named after a creature in Jewish folklore who is brought to life from mud.

Warshel, who, like Levitt, has U.S. and Israeli citizenship, said one of the first congratulatory phone calls he received Wednesday was from Israeli Prime Minister Benjamin Netanyahu.

Warshel, 72, said the prime minister did not understand the nature of the professor's work, but after a one-minute explanation he came to recognize its significance.

"Netanyahu told me that from now on he was going to force all his ministers to say whatever it was they wanted to tell him in just one minute," Warshel said, eliciting laughter from a crowd gathered at USC's Town and Gown Ballroom.

Meanwhile, theoretical chemists across the globe were basking in the new recognition of in silico, or computer simulated, research.

"I'm super excited," said James Skinner, a theoretical chemist at the University of Wisconsin-Madison. "Chemistry is basically an experimental field, and I think experimentalists sometimes were just skeptical that theorists could make a contribution."

Computer analysis is particularly helpful in studying large protein molecules, which consist of tens of thousands of atoms. John Straub, a computational chemist at Boston University, said that only with a computer could researchers create a model "that has a remarkable level of detail that can't really be captured by theory or experiment."

Asked what made him persevere for decades, even when his field received little recognition, Warshel shrugged.

"I had nothing else to do," he said.

Nobel Prize in Physics Awarded for Theories on Mass, Tied to Higgs Boson

Just about a year after the discovery of the elusive "God particle," the Royal Swedish Academy of Sciences awarded Peter Higgs and François Englert with the Nobel Prize in Physics today.

The prize isn't for the discovery of the Higgs boson itself, but for the physicists proposing two independent theories about how particles acquire mass.

Surprisingly, Englert and Higgs had never met each other until recently, despite working in the same field and creating theories that tried to explain the same thing. "The first time I saw him was at the Fourth of July conference at CERN [in 2012]," said Englert at a news conference today, referring to the European particle physics laboratory. When asked what he would say to Higgs when he saw him again, Englert said, "Of course I'm going to congratulate him."

Like this year's Nobel Prize in Physiology or Medicine, the physics prize was rewarded to research done several decades ago. Both Englert and Higgs published their initial theories of particles acquiring mass in 1964. But it was only as recently as last year that physicists at the Large Hadron Collider at CERN were able to put the theory to the test, observing a particle that fit the description of the Higgs boson.

Higgs Boson: Physicists See Best Proof Yet of 'The God Particle'

The so-called "Standard Model" of particle physics explains how subatomic particles like electrons and quarks interact with one another. While much of the Standard Model neatly falls into place thanks to the existence of the Higgs boson, there are still other problems that physicists are looking into to figure out why the universe is the way it is.

The topics of dark matter and dark energy are still at the forefront puzzles that physicists are looking to solve, Englert added. However, Englert said that there is one problem that he sees above all the rest.

"In my opinion, the most fundamental problem that is not solved today ... is the problem of the quantization of gravity," he said, referring to the fact that physicists have yet to come up with a viable framework to seamlessly integrate Einstein's General Theory of Relativity with the Standard Model of particle physics.